PNB joins long list of lenders raising capital; plans to raise Rs 10,000 cr via share sale, bonds

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Updated: Jul 10, 2020 8:43 AM

The bank took a decision to raise capital after the board meeting held on the combined balance sheet of the amalgamated bank.

PNB, PNB share sale, PNB Tier-II bonds, FPO, Oriental Bank of Commerce,union bank of india, ICICI Bank, credit Suisse,Kotak Mahindra BankThe government had infused Rs 16,091 crore in PNB during 2019-20.

Punjab National Bank (PNB) on Thursday said its board has approved raising Rs 10,000-crore capital through share sale and Tier-II bonds. Out of the total, Rs 7,000 crore will be raised through qualified institutional placement (QIP), follow-on public offer (FPO) or rights issue, the bank said.

The bank took a decision to raise capital after the board meeting held on the combined balance sheet of the amalgamated bank. PNB amalgamated Oriental Bank of Commerce and United Bank of India with itself effective April 1, 2020, according to government direction.

The common equity tier 1 (CET 1) capital of the amalgamated entity came down to 9.17% after the alignment of the balance sheet. The CET1 ratio of PNB stood at 11.9% before the merger. Similarly, the bank’s total capital adequacy ratio came down to 12.32%, as against 14.14% before the merger.

The government had infused Rs 16,091 crore in PNB during 2019-20. The government holding in the bank has risen to 85.59%, against 75.41% in March 2019, as per the latest data given by the bank.

A number of banks have announced plans to raise capital to absorb Covid-19 shock and strengthen balance sheets.
ICICI Bank on Wednesday announced to raise Rs 15,000 crore through share sale. State Bank of India will take shareholders’ approval to raise Rs 20,000 crore in the annual general meeting (AGM) to be held on July 14.

Private sector lender Axis Bank announced last week that it had received the board’s approval for raising up to Rs 15,000 crore though issuance of various securities. Likewise, Yes Bank board will meet on Friday to discuss modalities of the Rs 15,000-crore FPO.

Federal Bank will consider raising of capital in its July 19 board meeting. Kotak Mahindra Bank had earlier raised Rs 7,442.5 crore through a qualified institutional placement. Credit Suisse estimated that banks will need additional capital of $20 billion to tide over asset-quality issues.

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